BUSN1001 Lecture Notes - Lecture 1: Financial Statement, Financial Accounting, Income Statement
Document Summary
External users: parties outside the entity who use information to make decisions about the entity e. g. shareholders, suppliers, banks (won"t supply if companies are doing badly) Business transactions: exchanging something of value between two or more entities. Include such events as: withdrawals of cash by the owner(s, payment of wages and salaries, earning of fees revenue, purchase of an office photocopier, purchase of stationery, capital contribution by owners. Limitations of accounting information: time lag to users, historical information (does not predict future), and subjectivity. Conceptual framework: applies to all entities producing special purpose financial statements. Fundamental: relevance, faithful representation (neutral, free from error) Elements of financial statement: assets, liabilities, equity (balance sheet) Quick and inexpensive to establish and wind down (just need abn for dealing with ato), owner makes all after tax profits, not bound by company regulations, no separate income tax, total autonomy. Ability to share skill and capital, easy to establish and wind down (just need abn)
